Turkey market overview

Since 2000, Turkey’s success in economic and social growth has been remarkable, leading to higher jobs and incomes and making Turkey an upper-middle-income country. Interestingly, growing economic vulnerabilities and a more complex and difficult external environment have been threatening to undermine those achievements in the last few years.

Turkey has maintained a long-term focus on implementing ambitious reforms in many areas for most of the period since 2000, and government programs have targeted vulnerable groups and less favored regions. In 2002–15, the rate of poverty more than halved, and extreme poverty dropped even faster.

Throughout that time, Turkey has rapidly urbanized, retained stable

macroeconomic and fiscal policy structures, opened up to international trade and finance, harmonized many laws and regulations with the requirements of the European Union (EU), and significantly expanded public services. This was also recovering well from the 2008/09 financial crisis.

Turkey’s approach to the wave of nearly 3.6 million Syrian refugees was exemplary and provides a blueprint for other refugee-hosting countries. In recent years, however, reforms have been slowing in several areas which, along with economic weaknesses, risk reversing some of the progress done to date.

The macroeconomic picture as a whole is more precarious and unpredictable given increasing inflation and unemployment, declining investment, increased vulnerabilities in the corporate and financial sector, and patchy implementation of corrective policy measures and reforms.

Due to rising geopolitical uncertainties in the sub-region, there are also major outside headwinds. It is predicted that the effects of the COVID-19 crisis in Turkey would have a strong negative impact, further undermining economic and social gains.

Turkey also offers immediate and long-term prospects for foreign companies at the intersection of Europe and the Middle East. The country continues to enjoy a geographically advantageous position, a strong middle class, a youthful population (median age 31), and a strong sense of entrepreneurialism. However in the last year, Turkey has faced a variety of economic challenges. Currently, the 19th largest economy (in nominal terms), Turkey’s ambition to become the top 10 economies by 2023 (the Republic's 100th anniversary) could be stifled by growing debt, a weakening currency, rising unemployment, and increased protectionist and populist measures.

Moreover, a dynamic and burdensome regulatory environment, frequently volatile politics, periods of domestic turmoil, sometimes opaque bureaucracy, onerous and at times protective procurement procedures by the government, localized manufacturing criteria, an uncertain judiciary, a deterioration of the rule of law, purges in the public and private sectors and other obstacles to market access all affect the ability of foreign companies to do business in Turkey in varying degrees.  Foreign firms, particularly Malaysian ones, are therefore encouraged to work closely with Tuah Inc. to carry out due diligence, find suitable partners and vet potential projects.

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Doing business in Turkey

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Turkey is known for its hospitality and geopolitical location, which has made it an important center for attracting local and foreign investors in various sectors.

 

Succesful economy

  • A fast developing economy, with a GDP growth of 231 Billion USD in 2002, to a GDP of 851 Billion USD in 2017 which is more than triples the amount within 15 years. (TÜİK)

  • Stable economic growth; A yearly GDP growth between 2002 and 2007 of 5,8% (TÜİK)

  • With a yearly average economic growth pace of 5% in real GDP and with the fastest growth rate among OECD countries between 2018-2019, Turkey is the strongest growing and most promising economy within the OECD. (OECD)

  • In 2017 Turkey was the world’s 13th biggest economy and when only compared to the European Union Turkey is the 5th biggest economy according to the Turkish GDP statistics. (GDP, IMF, and WEO)

  • A formalized economy that drew 193 Billion USD Direct Foreign Investment over the past 15 years (TCMB)

  • A Mature and dynamic private sector due to the rise in export volume with 335% between 2002 and 2007 to 157 Billion USD. (TÜİK)

 

Population

  • A population of 82 Million (2019)

  • When compared to the EU the most crowded young population. (Euro Stat)

  • Half of the population is under the age 31,7 (2017, TÜİK)

  • Young, Dynamic, educated and a very cultured population

 

 

Qualified & competitive workforce

  • More than 31, 6 Million of young, educated, and motivated workforce. (2017, TÜİK)

  • More than 800.000 university graduates from 183 different universities (2017, TÜİK)

  • More than 985.000 college graduates with more than half of the students from technical and vocational colleges (2017, MEB)

 

Liberal investment environment - Open for innovation

  • Turkey is the second biggest reformer between OECD countries since 1997 after restrictions set on foreign investment (1997-2017, OECD, DYY )

  • A business-friendly environment where you set a business up in 6.5 days (World Bank Report 2018)

  • Very competitive investment conditions

  • A Strong Industrial and service orientated culture

  • Equal treatment to all investors from all over the world

  • With more than 58.400 companies with foreign capital in 2017 (Ministry of Trade)

  • International Arbitration

  • Transfer Guarantee

 

Foundation

  • A new and developed foundation in the transport, telecommunication, and energy sector.

  • A well developed and affordable Sea Transportation

  • The advantage of reaching East and Middle Europe by railway.

  • Well configured transportation facilities, with a direct shipping system to most of the European countries. 

 

 

Central location

  • A natural bridge between North and South and West and East and therefore an effective and low-cost alternative to important business markets.

  • Easy access to 1.7 Billion people in Europe, Eurasia, The Middle East, and North Africa.

  • Access to many markets with a total GDP of 25 Trillion USD

 

Energy terminal & passway to Europe

  • A very important energy portal and gateway that connects East to West.

  • 70 % of the natural energy resources of the world are located close to Turkey and mainly on the eastside. With that in mind and Europe being the biggest energy consumer and being located on the west of Turkey makes the country a key point in energy transport. A new Energy Terminal is being constructed in the area.

 

Low-interest rates & incentives

  • A decreased corporate Tax from 33% to 20% ( 22% in 2018,2019 and 2020)

  • A total or partial exemption from corporate tax and support to the social security share of employers for TAX advantages of technology development zones, industrial zones and free zones in addition to the tax advantage applied for land allocation

  • Research and Development Laws

  • Incentives for strategic investments, big size investments, and regional investments.

 

Customs agreement with EU since 1996

  • A continuing customs agreement with the EU and Free-trade agreements with 21 countries ( Ministry of Trade)

  • New Free-Trade agreements are being worked on.

  • Ongoing negotiations regarding the EU participation

 

Large national market

  • A rise in broadband internet subscriptions from 0,1 million to 69 Million between 2002 and 2017 (BTK, TÜIK)

  • A raising mobile phone subscription amount from 23 Million to 78 Million between 2002 and 2017 (TÜIK)

  • A Raise in credit card users from 16 Million to 62,5 Million cardholders between 2002 and 2017 (Card Center)

  • A Raise in Air Transportation users from 33 Million to 193 Million between 2002 and 2017 (TÜIK)

  • A raise in foreign Tourism from 13 Million to 38 Million between 2001 and 2017 (TÜIK)

 

Turkey’s natural resources include iron ore, copper, coal, chromium, antimony, mercury, gold, celestite (strontium), emery, barite, borate feldspar, pyrites, clay, limestone, magnesite, marble, perlite, and pumice. The country plays an important role as a transit passage for crude oil and natural gas shipments.

 

Major Turkish firms that operate in Malaysia are FNSS A.Ş, YONCA-ONUK, EVYAP, NOVAPLAST, TEPE KİMYA, DORÇE, ASELSAN, ARÇELİK-BEKO, HAVELSAN.